British households are losing confidence in the Bank of England as satisfaction in its handling of the inflation crisis has fallen to a new record low, according to official data on Thursday.
Last month, one-third of people in the UK were dissatisfied with how the central bank was controlling inflation as the cost of living surges, the Bank's own survey found.
That was the worst reading since records started in 1999 and pushed net satisfaction to -7%, another record and the only other negative result since May’s -3%.
Meanwhile the public's expectations for price rises over the coming year jumped to a record high in August, while longer-term prospects eased from previous multi-year highs.
The figures come a week before Threadneedle Street is due to hold its monetary policy meeting, where it is expected that interest rates will be hiked for the seventh month in a row as it seeks to stem high prices.
Economists expect the BoE to raise the base rate from its current 1.75% to rein in inflation, which was running at 9.9% last month – the highest in the G7 group of leading economies and almost five times the Bank’s 2% target.
UK households face the tightest squeeze as incomes fall behind inflation amid soaring energy bills and the rising cost of living.
Liz Truss last week announced a limit on UK energy bills, capping bills at £2,500 a year for two years, a move economists say will prevent a further spike in prices this winter but keep inflation strong into 2023.
But food prices continue to soar, according to the Office for National Statistics.
Food prices rose 1.5% between July and August – the largest July to August lift since 1995 – with the costs of milk, cheese and eggs contributing the biggest upward effect.
At an annual rate, food and non-alcoholic drinks surged to 13.1% in August, up from 12.7% in July, marking the highest rate since August 2008.
Analysts expect inflation to remain higher for lower income households as they still "face double-digit" inflation.
Jack Leslie, senior economist at the Resolution Foundation, said: "High inflation continues to drive Britain’s cost of living crisis, but the outlook has brightened considerably over the past week.
"However, high inflation is set to be with us for some time, particularly for low-income households who continue to be hit hardest by high prices."
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